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Key changes to Victorian taxes in 2026

From 2026, Victorian property owners face new tax obligations: VRLT applies to some unimproved land, and Congestion and ESVF levies rise.

RSM Australia highlights that Victoria's State Revenue Office (SRO) has begun issuing 2026 land tax assessments, ushering in a year of significant changes to the state’s tax landscape. These changes create new compliance obligations for many Victorian property owners.

Key highlights:
• 2026 Land Tax Assessments will be issued from late January 2026.
• Absentee owners were required to notify the State Revenue Office (“SRO”) of their status by 15 January 2026.
• Owners of Victorian property that was vacant in 2025 must notify the SRO of vacancy status by 15 February 2026.
• From 1 January 2026, VRLT applies to unimproved land in Metropolitan Melbourne that has remained undeveloped for five years.
• Short stay accommodation providers with booking collections under $75,000 must lodge their first annual return by 30 January 2026.
• Congestion Levy rates increase by more than 73% from 1 January 2026 for certain inner-Melbourne suburbs.
• From 1 July 2026, fixed charges under the ESVF levy will increase for residential and non-residential property.
• The SRO has indicated increased enforcement activity in relation to Land Tax and VRLT in 2026.

The SRO will issue 2026 Land Tax Assessments based on land held as at 31 December 2025. Property owners should review assessments to confirm land holdings, ownership details and valuationsare correct. Key items include:
• Ownership, including whether the assessment reflects the correct capacity (sole owner, joint owner or trustee).
• Taxable value, noting that land tax is calculated on the unimproved site value of land.
• Land description, ensuring properties sold before 31 December 2025 are not included.
• Exemptions and surcharges, including eligibility for exemptions and the application of any absentee owner surcharge.

From 1 January 2026, VRLT applies to land in Metropolitan Melbourne capable of residential development that has remained undeveloped for at least five years. This includes vacant land and land where construction has commenced but has not reached occupation stage. The five-year test is retrospective, meaning land undeveloped since December 2020 or earlier may be subject to VRLT in 2026.
The Commissioner of State Revenue may determine that unimproved land is not vacant where the owner is genuinely and actively progressing development and it is unreasonable to expect construction to have commenced within five years. Relevant factors include access constraints, cultural heritage or environmental issues, extreme weather events, utility delays and planning appeals. Economic conditions, labour shortages, design changes and financing constraints will generally not support the exercise of discretion.

Owners, tenants and booking platforms that accepted short stay bookings in 2025 must register and lodge returns by 30 January 2026 where booking fees did not exceed $75,000. Where booking fees exceeded $75,000, quarterly lodgement applies, with the next return due by 30 April 2026. From 1 January 2026, the Congestion Levy extends to off-street parking in Melbourne’s inner-eastern suburbs, including Cremorne, Richmond, South Yarra and Windsor. Rates have increased by more than 73% across both Category 1 and Category 2 locations. From 1 July 2026, the fixed charge under the ESVF levy will increase. Non-residential land will increase from $267 to $275 per annum, and residential land not used as a principal place of residence will increase from $132 to $136 per annum. 

Key compliance actions include reviewing 2026 Land Tax Assessments and lodging objections within 60 days where necessary, lodging VRLT vacancy notifications by 15 February 2026, and registering for and lodging Short Stay Levy returns where required. The SRO has indicated increased compliance activity in 2026, particularly in relation to incorrect exemptions, absentee ownership, trustee landholdings and vacant residential properties.

Source:RSM Victorian Taxes News